Tribes seeking larger cut of ND oil tax money

BISMARCK, N.D. — North Dakota’s Three Affiliated Tribes will press for a bigger slice of the tax revenue from the oil pumped on its reservation, the tribe’s tax director said.

Production on the Fort Berthold reservation, in the heart of western North Dakota’s oil country, has been responsible for $346 million in tax revenues over four years, the state Tax Department says. The tribe has collected $129 million, or 37 percent, of that sum.

North Dakota and the tribe have an agreement that details how the money is split. Last year, the tribe requested what its members thought was a more equitable share, but the Legislature rejected the proposal.

On Monday, a legislative committee that oversees state and tribal relations unanimously approved a resolution supporting the tribe’s effort to get a larger share of oil revenues. However, the panel turned down a separate proposal to give the tribe 80 percent of the tax collections from tribal land.

“We need more resources to combat and battle the negative impacts of the boom,” Mark Fox, the tribe’s tax director, told The Associated Press. “We have a lot to deal with up there. Roads, and crime, and housing.”

The 80 percent proposal likely will be introduced in the Legislature next session, said committee chairman Sen. David O’Connell, D-Lansford.

“I think they’re getting shortchanged,” O’Connell said. “Their roads are going to heck like ours are, and human services, the rising costs … It’s not all doom and gloom out there, but I think they need help.”

The July 2008 tax and regulatory pact spurred a burst of oil drilling on the reservation. There are now 706 producing wells on the reservation, compared to 112 in 2008, according to the state Department of Mineral Resources.

North Dakota has two separate oil taxes, a 5 percent production tax and a 6.5 percent extraction tax. Both are applied to the oil’s value. Currently, the state and tribal tax split from an oil well depends on whether it is drilled on “fee land” or “trust land.”

Fee land is a term for privately owned land within the reservation’s boundaries. The tribe gets 20 percent of production tax revenues from fee land, while the state gets the remainder.

Trust land is property that is held in trust by the federal government to benefit the tribe and individual members, and the oil revenues are divided evenly.

Fox said the tribe supports legislation that would give it 80 percent of the tax revenues from tribal land. The tribe wants the 20 percent share from fee land to be applied to both the production and extraction taxes.

Lynn Helms, director of Department of Mineral Resources, said Monday he expects most of the future drilling on the Fort Berthold reservation to be on tribal land — lending greater import to the tax revenue debate.

Rep. Jim Kasper, R-Fargo, said the future production forecasts influenced the committee’s refusal to endorse an 80 percent tribal share of oil revenue from tribal lands. A great deal of money is at stake, he said.

“We should change the formula, but it was difficult for me, anyway, to say, well, 80-20 is the right formula. That is a negotiation process that the Legislature needs to get involved in,” he said. “The governor needs to be involved in that process, as well as the members of the tribe.”